The United States has legitimate complaints against Chinese trade and technology transfer practice, but the Trump Administration’s ineptitude threatens to turn what should be a tough negotiation into a trade war. An unclear chain of command and mixed signals about US policy demands have led to a breakdown in China’s efforts to negotiate a mutually acceptable deal with Washington through low-profile diplomacy, because the Chinese side can’t tell which Administration officials are authorized to speak for the Administration, according to Chinese sources familiar with the events.
Confusion about who’s in charge in Washington also plague the tri-partite negotiations over the NAFTA treaty with Mexico and Canada. US, as well as Mexican government officials, had expected that meetings in Washington on April 6 would lead to an agreement in principle before President Trump left for Latin America.
After hours of talks last Friday with US Trade Representative Robert Lighthizer, though, Mexico’s Economy Minister Ildefonso Guajardo and Canada’s Foreign Minister Chrystia Freeland had nothing to report. Reuters reports that a lack of clarity over a US demand to raise the North American content of vehicles imported under NAFTA was a stumbling block.
The Trump team meanwhile has sent contradictory signals on an almost daily basis, with Treasury Secretary Steve Mnuchin and Economic Advisor Larry Kudlow pointing to a negotiated settlement while the President threatens escalation of punitive trade measures. World stock markets whipsawed all week in response.
Confusion in the Trump team reflects a deeper confusion in US policy, which has two quite different goals. One is to constrain China to eliminate manifestly unfair trade practices, of which the most egregious is the forced transfer of technology by American companies seeking access to the Chinese market.